Sirocco

26 May 2005 By Robert Cyran Follow @rob_cyran

The Italian utility says its deal with Egypt s Orascom values its mobile telecom operations at E12bn. But to succeed with such a weak partner it has had to structure a very complicated deal and that creates additional problems.

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Enel has agreed to sell its Wind mobile telecom unit to Orascom Telecom in a deal valued by the two groups at E12.1bn. Orascom, the North African mobile company, will contribute 50% plus one share of its equity into a new company called Weather Investments. For its part, Enel will inject 63% of Wind into Weather in exchange for E2.7bn of cash and a 5% stake of Weather. It will also transfer E7bn of debt associated with Wind into Weather.

In the first half of 2006, Enel will inject the remainder of Wind's equity. Enel's will receive E328m in cash and an additional 21% of Weather.

To sum up:

* Enel is selling Wind for E3bn in net cash, the transfer of E7bn of debt off its books, and a 26% stake in Weather.

*Weather will control 100% of Wind and own 50% plus one share of Orascom. Weather will have E9.2bn in net debt.

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